15 Dec 2016

IRISH CO-OPS MUST EMULATE EUROPEAN PURCHASERS AND BREAK 30c BARRIER BY YEAR END

IFA National Dairy Committee Chairman Sean O’Leary said that in the week in which most co-ops will be deciding on their November milk prices and considering the outlook for early 2017, they should draw confidence from the strong milk price increases in Arla and Friesland Campina among other European milk purchasers.

“Arla has increased their milk price by a total of 7.25c/kg since September 2016 to a December level just under 32c/kg, while Friesland Campina have lifted theirs over the same period by 12.5c/kg to 37.5c/kg – in both cases, this would be for milk at higher constituents than the Irish standard of 3.3% protein and 3.6% fat,” Mr O’Leary said.

“These are significant increases, and they are strong signals that those major operators are confident in the sustainability of the dairy market recovery,” he said.

“This must give our own co-ops the conviction that they can pass back market return improvements on November milk and in coming months, so that we can breach the 30c/l barrier by year end, and reach sustainable and profitable milk prices before spring peak,” he said.

“It is always important to keep a cautious outlook in the context of what we know to be a volatile market. However, we also know that supplies of milk globally are most unlikely to increase in response to improved prices in the coming months, because on-farm losses over nearly 3 years, massive cow culls and weather events affecting this year’s NZ peak have affected the structural ability of global dairy farming to respond any faster,” he said.

“It is therefore with confidence that I say to co-ops this month: you can and must increase milk prices to Irish dairy farmers, and help them return to the profitability and positive cash flow situation without which the sector cannot realise its full potential,” he concluded.